Diversity, Equity, and Inclusion (DEI) initiatives have deservedly garnered a lot of attention in the past years, both in and outside of the mortgage industry. Some organizations continue to do a great job elevating DEI in the mortgage space. In fact, we have a dedicated organization in the mortgage space, NAMMBA, which specifically discusses DEI issues. In order to continue this momentum, it is imperative to bring the subject into the light and recognize the good, the bad and the ugly, and make plans to continue pushing ahead.
Let’s start with a bit of a historical perspective. In 1968, the introduction of the Fair Housing Act (FHA) for the first time protected African Americans’ right to be considered for mortgage loans free from discrimination. And while progress has been made, redlining remains a very real practice for some lenders. It hasn’t been that long since we shared the story of a black couple who was given a significantly lower appraisal than a white friend—on the exact same house.
We’ve also discussed the progress the industry has made with mortgage lending for women, and what we believe still needs to be done. For decades, it was perfectly legal for lenders to refuse loans or credit to unmarried women or require a husband’s permission for married applicants. The Equal Credit Opportunity Act (ECOA) changed that, preserving a woman’s ability to be considered for a mortgage free from discrimination. ECOA also made it illegal for lenders to assume women wouldn’t return to work after maternity leave or ask women if they were pregnant or planning to start a family.
In 2015, gay marriage was legalized. Additionally, members of the LGBTQA+ community were now legally protected from discrimination by lenders considering them for mortgages. And, again, while significant progress has absolutely been made, the Consumer Financial Protection Bureau provided data only two years ago indicating that “when two men or two women apply for a mortgage loan together, they will receive, on average, higher interest rates and higher closing fees than those given to different-sex borrowers.”
It’s rare that we see any type of progress—of any kind—happen in a consistent, linear fashion. That’s certainly the case with DEI efforts in our space. They’re happening. Progress is taking place. But we’ve all seen the occasional smirk or heard the under-the-breath grumbling from time to time when mention is made of things like the FHA. We know that more than a few out there don’t view ECOA as a fulcrum for progress. Admittedly, for some the reason is the added cost and effort such laws (and similar rules or regulations) to their institutions. But for others, that’s not the only reason for the eye-rolling.
Believe it or not, progress in DEI—while we should be doing it, all other reasons be damned, because it’s the right thing to do. But there’s a bonus here as well. There’s a lot of business opportunity in lending to the underserved as well—yet another example of my belief that doing good is also good for business. Underserved minorities are a big part of a growing demographic seeking homes across the country. At a time when many are screaming from the rooftops that the mortgage market is drying up, savvy lenders are gearing up (or have already started) to serve those underserved. It can be a matter of bottom line as well.
But it’s not the only, or even primary, reason we should keep up the fight for progress toward ending discrimination in mortgage lending. And I’ll continue to use our modest platform to that end as well. The concept of “community” is one of the 3 pillars of the LodeStar mission. And community, by its very nature, means inclusiveness… all of us. I hope you’ll join us in the continuing effort to improve mortgage lending opportunities for all of us.
We at LodeStar are grateful to all of our clients, friends and colleagues who take the time to view Deeper Thoughts. Please consider having a look as well at some of our other great content, including our podcast, “LodeStar’s Lending Leaders,” and our new graphic-oriented series, “A Tale of Two Mortgages.”
As always, your feedback is welcomed and appreciated!